Review of Electricity In Ontaio




When I started writing, I started with an overview of Ontario's Electricity history.  This is essentially recapped below, providing a broad overview of the supply, demand and planning in recent decades.

Two and half years later, I wrote Stranded Debt - Abandoned Responsibility; which examines the same period from a financial perspective


A lot of information I had found, regarding the history of Ontario consumption, had disappeared off the web. Month's later I've located an Ontario Power Authority (OPA) document from 2005 that shows they kicked off their initial system planning with a similar, but much more in depth, review.  The figures I had previously put together showed this growth over the decades:


The OPA's Supply Mix Background Report, done in 2005, provided background That looked like a trend to me. I proceeded to show more specific data for 1990 onward - put together for Canada's GHG inventory reporting, IESO data, and Annually from 1990 onward we'll see the overall consumption trend. I've also broken up supply in terms of production of GHG's – illustrating that if the argument is we need to save the world from global warming, we've had a higher volume of emissions free electricity supply in the past.

 

The other note, about the emissions free supply, is supply has exceeded consumption each time we've ramped production of no, or low carbon sources, to over 120 TWh.   In 1990 you see the most significant gap where supply failed to meet demand, but that gap in 2003 figures prominently in the current liberal narrative about the whole thing being a mess when they came to power (it's a good thing Bob Rae is a Liberal now or he might be saying something about what Peterson left him!). On the other hand, you can see the current oversupply looks very similar to the situation in 1995, which Rae left to Harris.

The earliest forecast I find from McGuinty's first term is the ISO (now the IESO) 10-year forecast in 2004 that predicted anywhere from 24702 – 26400MW for peak demand in 2010, and it was  25075MW (although that was the highest in 3 years – the previous 2 years peak summer demand was below the low growth scenario from 2004). So we are far below expectations from 20 years ago, and also below expectations from 5 years ago.

The OPA (Ontario Power Authority) was created by McGuinty, and one of its tasks was to complete an Integrated Power System Plan. The IPSP process has been a farce, primarily due to politicians meddling with directives and mood-changed induced redirection, but in their IPSP submitted to the OEB in 2008, the OPA shows (on page 7 of 34) peak demand declining through 2015. That chart shows this year's peak should have been around the 25000MW it was, and peak drops to about 24250 in 2015.

A chart to demonstrate that peak, average, and minimum demand values tend to move in tandem. You can spot the years with exceptionally hot days in the chart, but overall the trends are the same. I'll include the same figures for production, and I'll note the focus of the OPA on peak reduction isn't reducing peak as quickly as the average (or annual) consumption is changing, nor is it declining much differently than the minimum demand.


Per capita measurements are more impressive.  Ontario’s Chief Energy Conservation Officer 2008 Annual Report, showed Ontario per capita demand at under 12000kWh annually, down from over 14000kWh in 1990 - below the average consumption level in the US (Figure 3.2), over 4000kWh below the Canadian average and with a declining trend contrasted to California's stagnant trend.  Collectively, we have a gentle downward trend in demand, whether peak or average or minimum, that dates back as a decline to around 2002, but much further as a trend (previously as a reduction in the rate of increase). Nobody seems to be predicting increased usage for 2015, and the delivery system is now handling the same volume they did 2 decades ago. We have adequate supply both in general, and for peak demand.
In fact, we have a 5-year trend of production outpacing demand now. That should deflate the price of supply.

The IESO does have an Hourly Ontario Energy Price (HOEP). This was designed for a competitive market as the price that is charged to "local distribution companies (LDCs), other non-dispatchable loads and self-scheduling generators." It would also be the motivation for suppliers to crank up the supply – in a competitive market. But reviewing all this data back to 2002, one can see we started without adequate supply, and then the Eves government froze the price, and potential suppliers appear to have lost interest.
This led to contracting of supply. Today most electricity in Ontario is procured through contracts, and the IESO has a mechanism to adjust the HOEP rate, which we'll see does follow market demand conditions, to recover, or give back (unlikely, but possible) the difference between the purchase price and the market rate. This is the Global Adjustment

This graph clearly shows that since 2007 the only driver of per watt price increases in Ontario is the contracting of supply at greater expense.  The HOEP does match the demand curve quite closely, but even as it declines the GA drives the commodity charge increasingly higher.



That's the current situation explained for the large consumers of electricity in Ontario on the Wholesale rate. That rate plan, which I believe covers about 45% of consumption, had other charges totaling 1.96 cents/kWh in October 2010 – the exact same amount shown on the IESO monthly report for October 2003.

For residential and small business consumers, the case is very different. For us, we approached 17 cents/kWh once all fees and taxes were included - close to double what was paid when Eves froze rates.    Your cost per kWh is likely up around 50%, but your cost for the services in getting that Watt transmitted to you are up 200% in that time. This was alleviated briefly by a pre-election 10% discount in the form of the Ontario Clean Energy Benefit. While popular discussion centres on wind and solar FIT rates, nuclear and gas contracts, etc., and I've demonstrated there is inflation entirely due to this government's contracting, the public utilities continue to rifle rates forward on the transmission side.
To transmit the same volume they did 20 years ago.